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US poverty rate was up last year
(nytimes)
Updated: 2005-09-02 08:26
Even as the economy grew, incomes stagnated last year and the poverty rate rose in the
USA, the US Census Bureau reported Tuesday.
It was the first time on record that household incomes failed to increase for
five straight years.
The portion of Americans without health insurance remained roughly steady at
16 percent, the bureau said. A smaller percentage of people were covered by
their employers, but two big government programs, Medicaid and military
insurance, grew.
The census's annual report card on the nation's economic well-being showed
that a four-year-old expansion had still not done much to benefit many
households. Median pretax income, $44,389, was at its lowest point since 1997,
after inflation.
Though the reasons are not wholly clear, economists say technology and global
trade appear to be holding down pay for many workers. The rising cost of health
care benefits has also eaten into pay increases.
After the report's release, Bush administration officials said that the job
market had continued to improve since the end of 2004 and that they hoped
incomes were now rising and poverty was falling. The poverty rate "is the last,
lonely trailing indicator of the business cycle," said Elizabeth Anderson, chief
of staff in the economics and statistics administration of the Commerce
Department.
The census numbers also do not reflect the tax cuts passed in President
Bush's first term, which have lifted the take-home pay of most families.
But the biggest tax cuts went to high-income families already getting raises,
Democrats said Tuesday. The report, they added, showed that the cuts had failed
to stimulate the economy as the White House had promised.
"The growth in the economy is not going to families," said Senator Jack Reed,
Democrat of Rhode Island. "It's in stark contrast to what happened during the
Clinton administration."
The main theme of the census report seemed to be the lingering weakness in
compensation and benefits, even as the ranks of the unemployed have dwindled.
Fewer people are getting health insurance from their employers or from policies
of family members, while raises have generally trailed inflation.
Last year, households kept income from falling by working more hours than
they did in 2003, the data showed. The median pay of full-time male workers
declined more than 2 percent in 2004, to $40,800; for women, the median dropped
1 percent, to $31,200. When some people switch to full-time work from part-time,
they can keep household incomes from dropping even when the pay of individual
workers is declining.
"It looks like the gains from the recovery haven't really filtered down,"
said Phillip L. Swagel, a resident scholar at the American Enterprise Institute,
a conservative research group in Washington. "The gains have gone to owners of
capital and not to workers."
There has always been a lag between the end of a recession and the resumption
of raises, Mr. Swagel added, but the length of this lag has been confounding.
In addition, the poverty rate rose last year for working-age people, those
ages 18 to 64. The portion of people age 65 and older in poverty fell, while
child poverty was essentially flat.
Over all, the poverty rate increased to 12.7 percent, from 12.5 percent in
2003. Poverty levels have changed only modestly in the last three decades,
rising in the 1980's and falling in the 1990's, after having dropped sharply in
the 1960's. They reached a low of 11.1 percent in 1973, from more than 22
percent in 1960.
In the same three decades that poverty has remained fairly steady, median
incomes have grown significantly, lifting living standards for most families.
After adjusting for inflation, the income of the median household, the one
making more than half of all others and less than half of the rest, earns almost
one-third more now than it did in the late 1960's.
But income inequality has also risen in that time and was near all-time highs
last year, the bureau reported. The census numbers do not include gains from
stock holdings, which would further increase inequality.
In New York, the poverty rate rose last year to 20.3 percent, from 19
percent, making it the only city of more than one million people with a
significant change. The reason for the increase was not obvious.
Among populous counties, the Bronx had the fourth-highest poverty rate in the
nation, trailing three counties on the Texas-Mexico border.
Many economists say the government's statistics undercount poverty in New
York and other major cities because the numbers are not adjusted for cost of
living. A family of two parents and two children is considered poor if it makes
less than $19,157 a year, regardless of whether it lives in a city where
$500,000 buys a small apartment or a mansion.
Households in New Hampshire made more last year ($57,400 at the median) than
in any other state, while those in West Virginia made the least ($32,600).
Fairfax County in Virginia ($88,100) and Somerset County in New Jersey ($84,900)
were the counties with the highest earnings, the census said.
The decline in employer-provided health benefits came after four years of
rapidly rising health costs. Some of the increases stemmed from inefficiencies
in the health care system; others were a result of new treatments that improved
health and prolonged life but were often expensive.
Either way, the bill for health care has risen, and more companies are
deciding not to pay it for some workers. The percentage of people getting health
insurance from an employer fell to 59.8 percent last year, from 63.6 percent in
2000. The percentage receiving it from the government rose to 27.2 percent, from
24.7 percent.
The trend is likely to continue unless the job market becomes as tight as it
was in the late 1990's and companies decide they must offer health insurance to
retain workers, said Paul Fronstin, director of the health research program at
the Employee Benefit Research Group, a nonpartisan organization in Washington.
The numbers released Tuesday showed a slight decline in median income, but
the bureau called the drop, $93, statistically insignificant. Incomes were also
roughly flat among whites, blacks, Hispanics and Asian-Americans.
The Midwest, which has been hurt by the weak manufacturing sector, was the
only region where the median income fell and poverty rose. Elsewhere, they were
unchanged.
Since 1967, incomes have failed to rise for four straight years on two other
occasions: starting in the late 1970's and in the early 1990's. The Census
Bureau does not report household income for years before 1967, but other data
show that incomes were generally rising in the 40's, 50's and
60's.
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